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UK’s largest multichannel travel company cleared for takeoff

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Plans to create the UK’s largest multichannel travel company have today been given the go-ahead by the Competition Commission.

Thomas Cook, The Co-operative Group and the Midlands Co-operative Society plan to launch a joint venture bringing together Thomas Cook’s 780 stores, as well as 360 owned by the Co-op and 100 by the Midlands as well as their online operations and some of their call centres. The merged business, which will not include Thomas Cook’s tour operator business, will be 66.5% owned by Thomas Cook, 30% by the Co-op and 3.5% by Midlands.

The joint venture, first announced last year, has now been cleared for launch by the Competition Commission (CC), which concluded that the move would “not result in a substantial lessening of competition in any markets in the UK, in particular for customers buying package holidays from high street agents. Therefore customers are unlikely to suffer from significantly higher prices or reduced choice as a result of the joint venture.”

In its report, the CC said the transaction was expected to result in the expansion of the travel business in the UK. “The main parties said… that the impact of the internet had resulted in a decline in the share of bookings through bricks-and-mortar travel agents and it was therefore necessary for travel agents to manage their costs carefully in order to remain profitable.” Savings are expected to be made as IT systems, headquarters and back-office functions are consolidated.

In a statement the three retailers said: “The Thomas Cook Group, The Co-operative Group and the Midlands Co-operative welcome today’s news that the Competition Commission has cleared their merger to create the UK’s largest multichannel travel retailer and note their conclusion that the joint venture will not result in a substantial lessening of competition.”

In interim results published earlier this month, Thomas Cook said the merger was part of its plan “to strengthen the competitiveness of the UK business and increase our in-house distribution capability, thereby improving profitability.”

The move chimes with an ongoing strategic review at Thomas Cook which aims to turn around its underperforming UK business through measures including improvement of its retail network through multichannel sales.

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